Food Security + Internet Government

This is a video posted by Ministry of Agriculture, Forestry and Fisheries of Japan (MAFF) on YouTube about how much food is currently being imported into Japan to satisfy the changing need in Japanese diet. It also encourages Japanese to change their diet for better health and ensuring future food security of Japan.

There are 2 issues here. Firstly, this is a good example of how Internet media can be used to help spread government intention to a emerging group of netizens in the country. Internet IS a friend to the government because YouTube is free and it is accessible to a wider audience than public seminars, pamphlets or TV.

Secondly, the issue being discussed here is VERY TRUE. The same would apply to any country, not just Japan. I don't know exactly how much food are we importing into Malaysia but obviously we imports a lot from China, Thailand, Australia and others.
"According to Dr Amin, who is also UPM's senior lecturer in agro-business and information technology, Malaysia's food import bill had reached RM23 billion in 2007. (read more)"

What makes the matter even worst is that US started to use corn to make bio-fuel (Ethanol-85%). Corn has always been the animal feed for cow, goat and pigs. Malaysia imports shiploads of those corn from the US to feed our chickens and ducks. This is why we see a price hike for food.

Here's the video. Watch and think, what will happen 5-10 years down the road.

Sabah oil palm planters leaving fruits to rot

KOTA KINABALU: Thousands of Sabah rural families involved in oil palm cultivation are in dire straits as mills are refusing to buy their oil palm fruits because of palm oil’s plunging price. read more...

Sabah has started a oil palm rush a few years back with oil palm plantations covering acreage 1.3 million hectares as of now with a potential for expansion to up to 1.7 million ha. In that regard, Malaysia has been criticized for clearing up natural rain forest once covered the land. What makes the matter "worst" is that Malaysian Government established the Palm Oil Industrial Cluster (POIC) at Lahad Datu in 2006 to help fuel the growth of oil palm plantations in Sabah.

Now with price of Fresh Fruit Bunch (FFB) down to RM290/mT, oil palm planters are suffering a lost due to high labor and fertilizer cost.

Carotech secures RM200m biodiesel contract

KUALA LUMPUR: Carotech Bhd, one of the largest local producers of palm methyl ester, has inked a RM200mil contract with Trafigura Beheer BV, Amsterdam for the export of its refined and distilled palm biodiesel to the US and Europe.

Managing director David Ho expected the agreement to contribute significantly to the company’s earnings and further strengthen its position as the leading supplier of palm biodiesel in the world. read more...

This is great news to all Malaysian oil palm planters. With Crude Palm Oil (CPO) free falling from about RM4000/mT in March 2008 till RM1472/mT closed on 14th Nov, oil palm planters do need a lot of assurance from the press to keep working on their farm.

Unsung Heroes

A few weeks ago, I started to carry my camera to work. With the 50mm f/1.8 and the kit lens, the combo is not too big nor heavy. Well, today I came across a nice photo opp, at the oil palm estate.

This is the oil palm's Fresh Fruit Bunch (FFB) where palm oil is extracted from. As you might already know, palm oil has surpassed the soybean oil as the most widely produced vegetable oil in the world. It also has a slew of other applications including making margarine and vitamin E pills.

Each of the little fruit is like a small coconut with a small kernel inside where palm kernel oil is extracted. In the international market, palm oil and palm kernel oil are priced differently. Palm kernel oil can be used to make soap.

Raja (age 30, left) is a Malaysian of the Indian ethnic. He was born in the estate and he has been working here all his life. He is not married but staying together with his girl friend in the estate housing. He makes RM 0.30 (US$ 0.10) per FFB harvested.

Ibrahim (age 26, right) came all the way from Bangladesh to work here. He is married but I didn't ask if he has got any children. I told him that I would give him copies of these photos so that he can send them home to his wife and he was really glad about that. He makes about RM20 (US$ 6.40) per day without over-time.

They work as a team during the harvesting, which occurs optimally once every 20 days. There are two "weapons" of choice to harvest a ripe FFB.

Here is a chisel that is used to hack at trees below 7ft. It is quite heavy and definitely not easy to hack a fruit from the oil palm tree. I've tried.

Here you can see Raja going at it.

For taller trees (to even more than 40ft!), they use a sickle, secured to an aluminum pole for reach.


Here you can see Raja cutting down a frond and an FFB in one swift action. The sickle is really really sharp, but it still takes a lot of effort to cut a fruit. YES, I've also tried that. The trick was not to "chop" the frond, but to "slice" it using the curved blade.

This is what you have after Raja did his round.

Ibrahim came in later to arrange the fallen fronds and to collect the FFBs using a hook and a wheelbarrow.

Ibrahim was wearing a safety helmet because it was raining and not due to any safety reasons :D
At the end of the day, Raja likes to take a sip at the tobacco and relax. So, these are the Unsung Heroes in improving Malaysian's international trade and in helping to solve the world shortage of edible oil. But what does the future hold for them?

Exciting Time!

During this past year of inactivity, the palm oil industry has experienced the most exciting time in decades.

The price of Fresh Fruit Bunch (FFB) has increased 104% from RM360/mT (19% OER on Dec 5, 2006) to RM 736/mT (19% OER on Mar 28, 2008)! The FFB price reached its peak on March 4th, 2008 at RM 855/mT!

This is a very exciting time indeed for oil palm planters!

Equator targets waste system at planters

This is another waste treatment idea by composing the Empty Fruit Bunch (EFB) using new technology developed in Taiwan National ChungHsing University. Their composing technique allows the EFB to turn into useful compose within 24hr. The company's Managing Director Murphy Koh wish to address the excessive waste at the palm oil mill and secondary pollution created by other EFB waste treatment techniques such as burning EFB as solid fuel, recycling EFB into papers, etc.

Equator targets waste system at planters
By ZAZALI MUSA

JOHOR BARU: Equator Life Science Bhd is targeting palm oil plantation companies as the main users of its biotechnology waste management system.

Managing director Murphy Koh said the company, via subsidiary Biosmart Sdn Bhd, had invented an instant composting technology (ICT) in joint venture with Taiwan National ChungHsing University.

Murphy Koh with the company’s soil conditioner, Biosmart Soiltonic
Koh said the technology was used to turn food waste from households and restaurants into compost fertiliser and had been used in Taiwan for five years.

“We decided to bring it to Malaysia and apply it in the palm oil industry,’’ he told StarBiz yesterday.

Koh said the company would unveil the ICT at the Bio Malaysia 2006 convention to be held from tomorrow until Friday at the Kuala Lumpur Convention Centre.

He added that the local palm oil sector instantly provided sufficient raw materials for the system to take off in a bigger way compared with in Taiwan.

Koh said more than 30 million tonnes of bio-waste were created from 400 palm oil mills nationwide after the oil had been extracted from the fruit bunches.

He said the bio-waste disposal was an important issue not only in terms of cost for disposal but also because it threatened the environment.

“The system allows us to utilise all bio-waste and will enable Malaysia to achieve zero-waste discharge for the palm oil industry,’’ Koh said.

Currently, there are various ways to utilise the bio-waste to produce solid fuel, paper, compress board and compost, but only a small fraction of the problem is solved due to limitation.

For instance, solid fuel, paper and compress board produce secondary pollution and composting process takes too long, needs a large space and is dependent on weather conditions.

Koh said the ICT system was able to convert oil palm bio-waste into organic fertiliser within a day, thus there would be no empty fruit bunches to be burned and no POME (pam oil mill effluent) to be discharged.

“Palm oil mills could install the machines within their vicinity and use the product as compost fertiliser for the oil palms,” he said.

He said the company currently produced SOS Soiltonic from the palm oil waste and the product helped rehabilitate “sick soil” from over-cultivation.

Koh said its plant in Banting, Selangor, now produced 50 tonnes of SOS Soiltonic daily and last month exported the product to China.

He said the company would also target the palm oil sectors in Indonesia and Thailand and commercial agriculture farmers in Japan and Taiwan for the products.

Carotech plans to triple biodiesel output

Carotech plans to triple biodiesel output
by Reuters

Carotech Bhd plans to more than triple its bio-diesel production to 125,000 tonnes a year, as it ramps up its core business activity of producing vitamins from palm oil.

The firm, a 55% subsidiary of Hovid Bhd, produces Vitamin E extracted from crude palm oil, and in the process gets bio-diesel or palm methyl ester as a by-product.

Carotech expects strong revenue growth from bio-diesel sales, given the growing global demand for green fuel, as nations from Asia to Europe seek ways to reduce dependence on fossil fuels and cut green house gas emission.

“We have gotten a head start in the market as we have been supplying bio-diesel to oil traders since 1995,” managing director David Ho told Reuters. “Now we just have to be aggressive in securing new clients.”

Ho said bio-diesel exports could contribute 60% of the company's revenue in 2007, up from 50% in 2006, as production increases.

Carotech, based in Perak, sells bio-diesel to oil companies for blending with petroleum fuel.

Earlier this year, it secured a two-year contract worth RM155mil to supply bio-fuel to Osaka-based Hatakeyama Oil Corp.

Carotech started operating its second vitamin extraction plant in May and aimed to start another unit by June 2007, Ho said.

He said Carotech's bio-diesel prospects were unlikely to take a big hit due to a spike in crude palm oil prices and a decline in petroleum, which has sparked a global debate on the viability of vegetable oil-based bio-fuels.

“It will affect us slightly. We will try to pass it on to our bio-diesel prices.”

The official did not disclose Carotech's exact bio-diesel prices, but said it sells the bio-fuel at US$600 to US$700 per tonne in short- and mid-term agreements.

The company posted a net profit of RM12.3mil for the year ended June 2006, an increase of 70.8% from RM7.2mil in 2005.

Proposed plantations merger up to shareholders, says Nazir

Since last week, CIMB Investment Bank have proposed to use Synergy Drive Sdn Bhd to merge the three largest plantation companies in Malaysia, namely the Sime Darby Bhd, Golden Hope Plantation Bhd and Kumpulan Guthrie Bhd.

According to the bank, by merging the plantation operation, the new company can cut cost and improve profit and it will become the world largest plantation company that contribute 8% to the world total palm oil production.

Proposed plantations merger up to shareholders, says Nazir
By Surin Murugiah

CIMB Investment Bank is leaving it up to Sime Darby Bhd, Golden Hope Plantations Bhd, Kumpulan Guthrie Bhd and their shareholders to decide on the proposed RM31.4 billion merger of the three companies by Dec 27.

"We have made presentations to the boards (of the three companies) and tabled the offer.

"We now leave it to them to decide," CIMB Group chief executive officer Datuk Nazir Razak told reporters in Genting Highlands on Dec 5 when asked to comment on the merger proposal.

He said the companies had 30 days to decide on the offer by Synergy Drive Sdn Bhd, which is the proposed special purpose vehicle to group together the three companies and their subsidiaries.

Asked what would happen if no outcome was achieved by that date, Nazir said: "We will cross that bridge if we have to. The offer date cannot be in perpetuity."

CIMB Investment Bank announced on Nov 27 of Synergy Drive's offer to buy the assets of the three plantations companies. It will see their existing major shareholders Permodalan Nasional Bhd, retaining control of the new enlarged entity.

Meanwhile, Sime Darby chief executive officer Datuk Ahmad Zubir Murshid told reporters in Kuala Lumpur that its directors planned to meet by Dec 25 to consider the proposed merger.

Renewable Energy from Palm Waste

Not only we can get bio-diesel from crude palm oil (CPO), but the Empty Fruit Bunches (EFB) that used to be production waste from the palm oil mill has since become quite valuable. Instead of burning liquid petroleum gas (LPG), some factories have modified their furnaces to burn EFB as fuel. For every 1 tonne of CPO produced, the palm oil mill will produce 1.1 tonne of EFB as waste. Therefore, for countries like Malaysia and Indonesia where the oil palm industry has matured, you can get unlimited supplies of EFB.

The Indonesian government has looked into this seriously and the result is promising.

According to Directorate General of Estate Crops, Ministry of Agriculture, 5.3 million ton of EFB was produced throughout Indonesia in 1997. Utilization of this amount of EFB as power plant fuel would potentially result in generation of 229 MWe.

The project described in this report is a power plant combusting 220,000 ton/year empty fruit bunches (EFB) in a specially designed high-pressure boiler and generating 10.3 MW electricity with a steam turbo-generator. The plant will be located in Pangkalanbrandan (regency of Langkat), a small town about 80 km northwest of Medan, the capital city of North Sumatra province (see Map). The EFB is collected from six existing palm oil mills and transported to the site. EFB is a technically challenging fuel due to high moisture content, fibrous nature and the high potential of the ash to slag in the furnace. Equipment has been specifically designed for dealing with this waste. The estimated economic life of the power plant is 20 years.

The objective of this project is to generate electricity for sale to the grid of PLN (the State Electricity Company of Indonesia) through utilization of surplus biomass residue from palm oil mills. This renewable energy project will offset the requirement of diesel generation to satisfy the ever-growing demand of electricity in the surrounding area. Thus this project would fit well to the principles and rules of Clean Development Mechanism (CDM). Potential estimated net reductions in Greenhouse gases (GHGs) emissions are 55,650 ton CO2-equivalent per year. (PDF)

Carotech MD: Incentives for biotech a good start

Seems like all the rage and venting of Carotech MD, David Ho Sue San has brought him some good news. StarBiz reported government announced incentive for Biotechnology industry as below.

THE incentives given for biotechnology are an encouraging start, but more can be done to “fast-track” the industry's development, said Carotech Bhd managing director David Ho Sue San.

“Biotechnology is a high investment and risky business.

“Locally, there are many individuals with bright ideas in the biotech industry but are afraid to take their ideas further due to financial constraints and lack of support,” he said.

He said the Government had been proactive in creating a biotech centre or resource base.

However, he added, more could be done to attract individuals as well as companies, both foreign and local, to set up their bases here.

Ho welcomed as “positive and encouraging” the incentives for Bionexus-status companies that merge with or acquire biotechnology companies within the next five years. These companies will be given stamp duty and real property gains tax exemptions.

“It is also good that the Government has given more incentives for biotech companies to set up bases here,” Ho said.

He noted that many developed countries like the US had provided attractive packages and incentives to entice more industry players and experts in specific fields of biotechnology from around the world to do pioneering work in their countries.

“Our Government should consider providing grants to biotech companies that show encouraging work in research and development that potentially could be commercialised,” he said.

Ho said the Government might want to look at providing specific and customised packages to attract individuals or companies to work here.

Malaysian American Electronics Industry chairman Datuk S.H. Wong said the RM210mil allocation for developing the biotechnology sector was consistent with the Penang state government's effort to build a biotech hub.

Malaysia has advantage as big producer of palm oil

Carotech Bhd is the first bio-diesel company in Malaysia to ship their product to Germany as they have the world-first bio-diesel that can withstand the cold of the winter in Europe.

StarBiz reporter interviewed David Ho, the Managing Director of Carotech Bhd and reported his rage and uneasiness towards the lack of governmental support for local bio-diesel industry.

StarBiz: Does Malaysia have a comparative advantage in the bio-diesel industry?

David Ho: Yes. Malaysia is the largest producer of palm oil (Indonesia might have crept past us) in the world. Palm oil is also cheaper as raw material for bio-diesel compared with soybean and rapeseed and is the most abundantly produced vegetable oil in the world.

StarBiz: Will bio-diesel be the future source of alternative energy transport?

David Ho: Definitely. We see the future transport mode to be based on bio-diesel hybrid vehicles (bio-diesel/batteries or bio-diesel/hydrogen) depending on whether such technologies can be made available to the masses at economical prices.

Also, diesel and bio-diesel are cheaper, providing 30% more mileage per liter compared with gasoline. Diesel and bio-diesel cannot be replaced, based on current technologies, as many heavy-duty vehicles like trucks, buses and tractors require the “pulling power/torque” to haul such heavy loads and petrol/ ethanol cannot provide such power as cheap as diesel/bio-diesel.

Ultra Low Sulfur Diesels (ULSD) is more environmentally friendly than petrol and works better blended with bio-diesel.

Currently bio-diesel and ULSD blend are the most favored fuel in Europe. Today, over 70% of new vehicles registered in Europe are diesel powered.

StarBiz: Carotech has expanded successfully abroad. Is it easy for local players to emulate Carotech’s success?

David Ho: The key to success in this industry is technology and quality. We have the first integrated bio-diesel plant in the world able to produce bio-diesel and phyto-nutrients from crude palm oil (CPO). Our patented technology allows us to achieve stronger revenue from the two divisions and at lower operating cost.

Bio-diesel is a risky business as the selling price is not correlated to prices of CPO or refined, bleached, deodorized palm olein - the raw material used. If the selling price, which is at present pegged to crude petroleum prices, falls and CPO prices continue to rise, then typical bio-diesel plants would find it hard to stay afloat as the margins are squeezed.

Based on current petroleum prices and rising trend in CPO prices, many bio-diesel players would be re-evaluating their plans to enter the industry.

Carotech’s technology allows us to be more resilient and able to cope with higher prices of CPO or lower prices of petroleum.

A successful bio-diesel producer must not only adopt good technology to maximize revenue and reduce costs. He must also produce high quality products consistently.

StarBiz: What are the current benefits given by the Government to the industry?

David Ho: The Government has announced it will accord the pioneer status or high technology status to bio-diesel companies, which provides a 70% and 100% tax waiver for five years. I am not aware of any company that has obtained these incentives. Besides the normal existing incentives, the Government has not given any special incentives for bio-diesel producers.

StarBiz: What additional policies or Government support are required for local players to go global?

David Ho: To compete globally, local players need to produce high quality cost-competitive products. To have cost competitiveness a producer must achieve economies of scale in operations and this can only be achieved with a large market.

Ironically, the authorities are not promoting the use of bio-diesel, as defined internationally with a chemical name of methyl ester, in Malaysia. Without a local market, our local players would have less demand for their products and need to rely heavily on the European market, which favors its local rapeseed bio-diesel.

The Malaysian Envo oil is not the equivalent of the internationally accepted biodiesel (methyl ester). Envo oil is a blend of 95% fossil diesel and 5% palm olein.

Many markets like South Korea, the United States and European Union (EU) do not allow the use of direct vegetable oil into diesel engines. For instance, the EU standard on bio-diesel (EN 14214) requires a minimum content of 96.5% methyl ester and no more than 0.2% triglycerides.

As such, we are adding 5% oil into diesel to call it bio-diesel. This brings a new definition of bio-diesel only seen in Malaysia!

If diesel engines can consume vegetable oil directly, why would the existing world standards on bio-diesel require at least 96.5% methyl ester for it to be deemed bio-diesel? We need to critically re-look at the existing policies.

Also, diesel is now being subsidized by the Government. But there is no such subsidy for bio-diesel, which mean local producers will have difficulty selling their products in the local market.

StarBiz: What can local players do to help themselves?

David Ho: The local players coming into the industry will need to be extremely careful in choosing their technology and critically look into the quality of their products. In the long run, only the high quality, cost-competitive products will survive in the global arena.

Malaysian Plantation Stocks Surge On Biofuel News

Plantation stocks topped Bursa Malaysia's gainers list yesterday, buoyed by the announcement on Thursday of a joint initiative by the Malaysian and Indonesian governments to set aside six million tonnes of crude palm oil (CPO) annually for biodiesel (120,500 barrels per day). Previously, we reported that palm oil is a true GDP-booster for both Malaysia and Indonesia, the oil being the second biggest export earner for both countries, and that in 2005 the 'Plantation Index' outperformed all other indexes, including the tech and oil indexes.

The biofuels committment pushes this trend up even further. The rising prices of CPO, which breached RM1,500 (€321/$407) per tonne after stagnating at RM1,400 (€300/$380) in the first six months of this year, have also led to expectation of potentially higher earnings for plantation companies by year-end. Plantation players generally welcomed both governments' initiative to allocate six million tonnes, or 40% of their total annual production, for biofuel and biodiesel production effective this year.

Malaysia's CPO production is estimated at 15 million tonnes this year, with new annual capacity of about 600,000 tonnes. The country's palm oil stockpile stands at 1.6 million tonnes.

Oil Palm Tree

Here we have an oil palm tree with no less than 10 fruit bunches surrounding its trunk. Some of them will ripe and be ready for harvesting that is due in a week. Palms here are harvested once every 21 days. As the palms get older, they will be harvested once every fortnight.